Archives for 2013

Break Clauses – Get it right first time

Many commercial leases include break clauses allowing the tenant to bring the lease to an end before the contractual term ends. These give tenants flexibility from being tied into a long term. In the recent economic downturn tenants have been attempting to exercise break clauses to release themselves from leases with upwards only rent reviews or other obligations that landlords used to be able to impose.

Some of these attempts to escape have come unstuck. Even very minor failures of no commercial value may block a break. There have been many court cases recently about whether or not break clauses have been effectively operated.

This is a high risk area for any business. If you plan to break your lease but don’t get it right you don’t get a second chance. You may be stuck for several more years with an obligation you have decided to get rid of and possibly two sets of premises. For landlords the stakes are equally high;  they and their lawyers will go over any attempt to operate a break clause with a fine toothcomb.

The Code for Leasing Business Premises in England and Wales recommends that the only pre-conditions to a tenant exercising a break clause should be that they are up to date with the main rent, give up occupation and leave behind no continuing sub-leases. In practice many older leases include other pre-conditions which can be a trap for tenants.

Any tenant considering exercising a break clause should plan ahead. The starting point is to look at the lease:

  • When is the break date ?
  • Notice will have to served – often several months in advance. What is the last date on which notice can be served?
  • Is there a specified form for the notice or is there specified information to be given ?
  • What does the lease say about serving notices? Who is to be served? Where ? How?
  • Are there any pre-conditions for exercising the break clause, and at what date do they have to be satisfied?
  • Rent will almost always have to be up to date, but that may include other payments defined in the lease as rent. Have you ever been late paying something and triggered an obligation to pay interest reserved as rent? There has been much litigation about what to do when rent is due for a period which continues beyond the break date. The basic advice is to pay everything that is due and try to get it back afterwards. The loss of a quarter’s rent is far less than being stuck with rent for several more years.
  • Is there an obligation to have complied with all the tenant’s obligations in the lease? At what date? Is that qualified by the word “material”? If not, even minor, previously unnoticed breaches may block compliance. If in doubt comply. Obligations as to the state of the premises on termination may be scattered throughout the lease. Can you identify tenant’s fixtures or alterations which you should remove? Aim to get work done well in advance of the break date and allow a margin for delays. Try to get the landlord to approve them.
  • You must give vacant possession – be very careful to do exactly that. Contractors still on site doing repairs, or even rubbish in the basement, have prevented tenants from meeting this obligation in recent cases.

Unless you are absolutely sure you understand everything you have to do get legal advice, and get it early. Deadlines for break clauses are absolute and if you miss them even the best lawyer in the land won’t be able to help you. You may be able to do a commercial deal, but from a position of weakness. With some other issues it may be possible to litigate whether you have complied or not, but this will be substantially more costly than getting early advice and getting it right first time.

Finally, when taking on new premises look carefully at any break clause – if you can’t make it unconditional, negotiate for it to comply with the Code for Leasing Business Premises.

Free employment advice service from ACAS

You don’t always need to pay for help with legal problems. Harris & Harris is always here – it may be cost effective to pay us for advice if the issue is serious or complex. However, there is free help available about employment problems from Acas, and they offer guidance on many everyday employment law issues.

Acas have a free online advice service for employers and employees who want answers to work related questions. It’s a good place to start. Sometimes Acas will give you the reassurance you want. If they can’t that’s the time to contact us. Acas will usually recommend that you get legal advice if they think you will need it.

Acas Helpline online offers 24 hour free advice and guidance on rights at work and employment law. Employers, employees and HR managers can receive an instant response to their work related questions and the service can help users feel more informed before a conversation with an Acas helpline adviser.

Helpline online answers over 600 of the most frequently asked workplace questions on topics ranging from maternity and family friendly rights to absence and bullying and harassment.

Available since June 2013, employers and employees have already used the service over 50,000 times. The top three questions so far are:

  • How can an employer change the terms of a contract when an employee does not agree to the change being made?
  • How can an employee raise a grievance?
  • What are the different types of dismissal?

The Acas Helpline team develop and improve the content to reflect the feedback received.

Acas Chief Executive, Anne Sharp, describes it as being an addition to their range of workplace advice services. To access helpline online visit www.acas.org.uk/helplineonline. You can also speak to an Acas helpline adviser on a whole range of workplace issues on 08457 47 47 47 from 8am – 8pm Monday to Friday and 9am-1pm on Saturday.

If you need more than Acas can provide please contact Neil Howlett or Andy Hambleton.

Make a Will, make a difference

Harris & Harris is pleased to announce that we will be taking part in Will Aid’s 25th anniversary Make a Will Month this November.

During November, we will waive our fee for drawing up a basic Will and instead invite our clients to donate to the Will Aid group of charities. The suggested donation is £90 for a single basic Will. The money raised will be shared by the nine Will Aid charities* and is used to transform the lives of people in the UK and around the world. Over the past 25 years, Will Aid has written over 250,000 Wills and raised £13.6m in charitable donations.

Having an up to date and properly written Will is the only way to be sure that your money and possessions will be distributed according to your wishes. It is also the only certain way to avoid difficulties for your relatives and friends after your death. By making a Will with Will Aid you will be protecting your loved ones’ future and helping to raise money to support the vital work of the Will Aid charities.

For further information or to make an appointment to make a Will please call either our Wells or Frome office.

Together we can make a real difference to your loved ones security in the future and at the same time help the thousands of people in the UK and around the world helped by the Will Aid charities.
*The Will Aid charities are: ActionAid, Age UK, British Red Cross, Christian Aid, NSPCC, Save the Children, Sightsavers, SCIAF (Scotland) and Trocaire (N. Ireland).

 

Our Wills Specialists:-

Caroline Fletcher at our Frome Office

Annemarie Swainson or Joshua Eva at our Wells Office

Charity Moat Boat Race 2013

The ‘swans’ of team ‘Harristocrats’ took part in the 2013 Moat Boat Race at the Bishops Palace, Wells. On a glorious summer day, thirty rafts took to the chilly waters of the Bishops Palace Moat in home-made rafts to compete for glory in front of a record crowd.image13

Despite a massive effort from the team to paddle a raft constructed from steel and plastic containers the Harristocrats were unable to make the finals and compete for a podium finish. A great day was enjoyed by all involved and plans are now afoot for a new lighter and quicker raft for next year’s race!

The team would like to say a massive thank you to all involved and especially to all the kind sponsors. The money raised is being donated to The City of Wells Lions Club and St Margaret’s Hospice.

The raft was crewed by Joshua Eva, Andy Hambleton, Christopher Mullett and Joe Stradling.

Footage from two of the races can be viewed at:

http://www.youtube.com/watch?v=9euZIv8B_Ew

http://www.youtube.com/watch?v=Gtk-sKkJDYc

Social Media at Work – Who owns it?

Social Media accounts may be an important part of a business model. They will be part of the way a business communicates with customers and potential customers and the image the business presents to the world. They can be a valuable asset. They can also be used to damage a business’s reputation or to steal its customers.

Who owns social media accounts as between and employer and an employee? The lawyers answer is that this should be defined in the Employment Contract. In reality that doesn’t always happen. Many employers are willing to allow junior employers to set up accounts because they know how. They may monitor them, or not. They may not systematically collect logins and passwords.

So what happens when an employee leaves and none of these in place? All is not lost for the employer. In a recent case the High Court ordered one former employee of a publishing company to hand over business cards he had collected whilst an employee, and another to hand over the access details for LinkedIn groups that she had managed. Both ex-employees had taken steps while they were still working to set up a company whose business model was similar to their employees, persuaded other staff to leave and used the cards and LinkedIn groups to contact customers of their former employer. The employee who ran the LinkedIn groups claimed they were “personal”, which was rejected as they were done at work, and the employee who had the business cards was alleged to have purchased software to download them all before handing them back.

The judge did not have any difficulty in finding that there was a strong case that the employees had breached their duties of good faith before leaving. Having done that the judge granted the employers a “springboard injunction” to restrict the employees’ activities in their new business in such a way that they gained no unfair competitive advantage from their wrongdoing. That was effective immediately, and will last until a full trial. In most such cases the parties having had a first experience of litigation settle out of court.

Such “springboard injunctions” are well established, though not cheap to obtain. Employers need to find evidence of the employees’ wrongdoings, which here was fairly easy as they hadn’t covered their tracks. That’s why lawyers, if asked, will always advise employers to cover these issues in contracts, handbooks and policies, and also to negotiate post termination restrictions for key staff.

For advice please contact Neil Howlett or Andy Hambleton.

Protected Conversations – Are they safe?

From 29th July 2013 it will be possible for employers and employees to enter into discussions to end employment on a confidential basis.  These changes are intended to address the difficulty for employers that they cannot have “off the record” discussions with an employee unless there is an existing dispute between them.   Where the issues are ones of performance or absence or “fitting in” employers do not want to create a dispute.  Although well intentioned, this change in the law may create more problems than it solves.

The main problem with the new law is that it only prevents the use of the discussions in cases of Unfair Dismissal.   The discussions could still be used in a claim based on Discrimination, or one of the grounds where a Dismissal is Automatically Unfair.   They will also be admissible in a claim for Unfair Dismissal if there is “improper behaviour” which includes bullying and victimisation, or putting undue pressure on a party.  The gloss that it must include (but not be limited to) “unambiguous impropriety” isn’t that helpful. Exactly what will be regarded as improper behaviour will doubtless be fought out before the Employment Appeal Tribunal.

ACAS have issued a Code of Practice on Settlement Agreements and discussions. That is not statutory but is guidance on good practice, and failing to follow it may be “improper behaviour”.   This includes the requirement for a “reasonable period of time” to consider any proposed Settlement Agreement, which ACAS say should be 10 calendar days “as a general rule”, and that if there are to be face to face meetings that the employee should be allowed to be accompanied; similar to the rights they have to be accompanied at Disciplinary Hearings.

There remain many pitfalls even for the well intentioned employer.  Employers wanting to use this procedure are likely to need legal support.   They will want to be sure that there are no circumstances from which the employee involved in such a process might plausibly raise any claim for Discrimination, either direct or indirect.   They will also want to ensure that the process follows the ACAS guidance and that it cannot plausibly be alleged that any part of it amounts to “improper behaviour”. Employers will also need to consider what the Employee should do during any period when they are considering a proposed Settlement Agreement; can or should they be suspended or put on Garden Leave, and does the employer have the right to do that?

Finally, even if an agreement is reached for it to be enforceable against the employee it must still be in the form of a Compromise Agreement (to be renamed ‘Settlement Agreement’) on which the Employee must have independent advice and which must meet the statutory criteria contained in s.203(3) Employment Rights Act 1996.  Employees will expect employers to pay for the cost of such advice. It appears that the proposal to produce a Model Settlement Agreement has been dropped, and in any case it is likely that such model agreements would need to be edited to take into account the specific circumstances of each individual case.

See here for the ACAS Code of Practice

For advice please contact Neil Howlett or Andy Hambleton.

What can we do for you?

You can obtain legal services from many sources, both regulated and unregulated. The latest new kid on the block is the Co-op who think they are different because they will “put the customer at the heart of our plans” and will be “serving the community”.  Apparently they think that “for a solicitor it’s an alien approach”.  We think we have been doing that at least for more than 100 years.

The Co-op’s first point of contact will be YouTube which will point customers towards a call centre and then, if necessary, a solicitor. At Harris & Harris we think you should always speak about your problem or transaction to someone who knows what they are talking about. Here a few good reasons why you can trust us:

Expertise – All our solicitors are specialists. They will only act for you if your work falls within their own particular areas of expertise. If not, but someone else at Harris & Harris has that expertise they will introduce you. If it isn’t work we do we can recommend a specialist, and we do not take a fee for doing that.

Experience – Solicitors working for Harris & Harris have accumulated more than 200 years’ experience between us.  However new your situation may be for you, we’ve probably seen it and solved it before.

Solutions – We have to help achieve your aims, or find the best solution to your problem. That also means being realistic with you about what is achievable, risks and costs.

Independent – We’re independent. We neither owe obligations to, nor are dependent on anybody but you, our clients. Our advice is completely impartial and puts you first.

Trust – People have been coming to us for help for more than a hundred years. Our service to them and our professionalism are our “marketing strategy”. We believe that looking after you is the best way to ensure you come back, and recommend us to others.

Engagement – We will gain understanding of you and your business, not just treat the legal issues as an isolated single transaction. We’re a part of our community, not just of businesses, but as people, churches and community organisations.

Management – We’ve held the Lexcel Quality Mark since 2004 – we were one of the first firms in the area to gain accreditation. We’re a Partnership and we involve our staff in how we are managed so we all understand how to run a business.

Guaranteed – We don’t say this. What we do is backed up by professional regulation and professional indemnity insurance.

Teenage Parties – Parental Responsibility

There is a lot of concern about “compensation culture” and whether to do things or not. Much of this is whipped up by the papers, who don’t report the outcomes. A good example of this is the failure of a claim against the parent of a child hosting an end of GSCEs party by one of the guests.

One of the guests brought a large paddling pool to the party, and, a modest quantity of alcohol was consumed by the children under supervision. The children were boisterous but not drunk. The parents called the children into the house to eat, partly to calm things down. While they were there one of the boys went out, ran across the garden and attempted a belly-flop into the pool. Sadly, he misjudged the angle so as to end up carrying out more of a dive motion and struck his head on the bottom of the pool.

The claim was dismissed. Clearly, the parents owed a duty of care to the young guests, which was the same that a reasonably careful parent would show for their own child. The Judge said this required them:

“Reasonably to keep an eye on what was going on; to keep abreast of what people were doing; if matters were getting out of hand, to intervene in a reasonable manner, though not so as to spoil the party.”

The Judge confirmed the parent was not in breach of the duty of care owed to the injured boy. It was unrealistic to say that the presence of the paddling pool created a foreseeable risk of significant injury. The risk of diving into a paddling pool was obvious. The parent did not have a duty to instruct a child aged 16 about an obvious risk. Everyone was sympathetic to the boy, but that didn’t make him entitled to money to compensate him for his own foolishness. That seems common sense,

For assistance with Dispute Resolution please contact Neil Howlett in Frome or Andy Hambleton in Wells

Unregulated Will writing services

There has been widespread dismay amongst consumer groups at the Justice Secretary Chris Grayling’s rejection of the recommendation by the Legal Services Board that Will writing should be regulated – see our earlier article for what that means.  The LSB had recommended regulation in a report submitted in February 2013 because of concerns about the quality, sustainability and lack of consumer protection. Grayling accepted the need for improvements but is quoted as having said “further efforts should be made to see if measures can be made more effective before resorting to reservation”. In contrast one commentator who campaigns for access to justice wrote that he had “not only ignored overwhelming evidence of significant consumer detriment but cocked an almighty snook in the direction of the broad consensus calling for regulation.”

The consumer group Which? says on its website: “Will writers are an alternative to solicitors, but unlike solicitors they don’t have to be qualified or regulated.” and “The main benefit of going to a solicitor is that you can discuss face to face what you want the will to achieve.” In addition, solicitors are qualified and regulated so “If something goes wrong, you or your dependants have access to redress through the relevant body’s complaints service and compensation fund.” The Citizen’s Advice Bureau also says “It is generally advisable to use a solicitor or to have a solicitor check a will you have drawn up to make sure it will have the effect you want. This is because it is easy to make mistakes and, if there are errors in the will, this can cause problems after your death. Sorting out misunderstandings and disputes after your death may result in considerable legal costs, which will reduce the amount of money in the estate.”

Unregulated Will writers may be incompetent, untrained and uninsured. An article in the Guardian “Writing a will – the right way”  in February 2013 said: “Alternatively, you could hire a low-cost will writing service. But be careful if you do, because unregulated will writers have been accused of ripping off consumers”. The same article comments “Using a qualified solicitor may be cheaper than you think.” Some Will writers advertise headline cut price offers, but may charge for additional services and end up being more expensive than solicitors.

Lawyers at Harris & Harris are not just qualified and regulated, they have years of specialist experience, and are members of specialist bodies like STEP.

Contact  Annemarie Swainson or Joshua Eva

Rough for the smoothie; or not so Innocent ?

When advising on Intellectual Property Rights (IPRs) the one thing we always emphasise is to set out and document agreements from the start.  Anything else is a recipe for disaster either for the designer or the business commissioning the work. You might expect businesses with a high profile as innovative and efficient to get it right but here’s an object lesson in how to get it wrong.

Everyone knows the wunder-brand Innocent and their iconic logo of the sketched apple face and halo.  This was created in 1998 in a eureka moment of “back of the envelope” genius during a brainstorming session involving the designer and the three friends who founded Innocent.  The company owned by the designer (Deepend) and Innocent (Fresh Trading) had drawn up heads of terms by which design services would be provided in return for shares in Innocent.  So far so good, but then it all went wrong.

The parties couldn’t agree whether the heads of terms were ever agreed and neither could produce a signed document.  Then Deepend went into liquidation.  Innocent never allocated any shares nor paid anything.  Not so good, and about to get worse.

Innocent did quite well; they obtained a Community Trade Marks (CTM) for the logo.  In 2007 the liquidator of Deepend assigned the copyright in the “halo” logo to a Mr Andrew Chappell, who assigned it to a company which applied to cancel the CTMs on the grounds that it had the copyright in the original “halo” design.

The tribunal which determined CTM disputes (OHIM) concluded that copyright subsisted in the original “halo” logo, as it was a commission Deepend were the owners of the copyright, in the absence of any written assignment Deepend, Innocent’s CTM infringed the “halo” design, so were cancelled.

OHIM also rejected arguments that in these circumstances, where the business had used the logo without complaint for a decade, that it had acquired all rights by an equitable assignment, or that there was an implied term requiring assignment of the copyright to give commercial effect to the agreement.  Such arguments have succeeded in the English courts, but Innocent have a difficulty that even if there was an agreement they didn’t comply with their side of it – in short, they never paid.

This isn’t the end of the case and you won’t see the Innocent logo disappear from the shelves soon. Innocent (now owned by Coke) has made enough money to pay lawyers to appeal.  However, even if it succeeds it won’t recover most of those costs, management time will have been diverted and business planning disrupted.  Usually big share sales include warranties about the ownership of IPRs.  If the founders gave such warranties that could be costly for them.

Posted 8th May 2013

For advice on Intellectual Property contact Neil Howlett